$179M bond sale floated for upgrades in Rockford schools

ROCKFORD — The Rockford School District could ask voters to approve at least $139 million in bond sales in November to help pay for major capital projects, including school construction and much-needed building upgrades.

By Cathy Bayer

Rockford Register Star

By Cathy Bayer

Posted Jul. 25, 2012 at 12:01 AM
Updated Jul 25, 2012 at 10:15 PM

By Cathy Bayer

Posted Jul. 25, 2012 at 12:01 AM
Updated Jul 25, 2012 at 10:15 PM

ROCKFORD — The Rockford School District could ask voters to approve at least $139 million in bond sales in November to help pay for major capital projects, including school construction and much-needed building upgrades.

Under a plan the Budget and Finance Subcommittee approved today, district officials would ask the School Board to approve the sale of $20 million in Health/Life Safety bonds for projects mandated by the state, and $26 million in alternative revenue bonds, repaid from the district’s operating funds, not property taxes. That $46 million in bond sales doesn’t require voter approval.

In all, the district would count on $179 million in available construction funds from bonds after covering the sale cost and interest, plus additional reserve cash. That funding, officials say, would be utilized without raising the district’s tax rate.

“They could do this a million different ways,” said Anne Noble, senior vice president of Stifel Nicolaus, which the district hired for bond issuance underwriting services.

But officials made it clear that raising the tax rate for such an overhaul was out of the question. Noble said the district has managed its debt well, and current bonds are set to retire soon, so officials are in a good position to borrow.

“The district’s been very prudent and conservative in the debt they have taken on over the past years, and that has laid the groundwork for them to be able to do this now, without causing a tax increase,” she said after the committee meeting.

If the School Board approves the plan and voters approve a bond referendum, the $179 million still wouldn’t pay for all work district leaders want to do. But asking voters to approve more money would mean higher taxes, Chief Financial Officer Cedric Lewis said.

“We’d have to raise taxes,” he said. One hundred seventy-nine million dollars is “what we can raise, knowing the likelihood of us raising our taxes is slim to none.”

Some reserve cash could be tapped for additional work. “We’re going to try to do as much as we can internally so that we don’t have to ask the taxpayers for a tax increase.”

He plans to continue to budget conservatively, but the idea isn’t fool-proof. The tax rate could still rise if equalized assessed values of Winnebago County properties fall more than officials anticipate.

“If our conservative estimates aren’t conservative enough, then that could lend to a tax increase,” Lewis said. “But that’s very unlikely to happen, given the conservative estimates that we used.”

What’s next: The School Board will hear the administration’s priorities at a special meeting next week for the 10-year facilities master plan, which interim Superintendent Robert Willis dubbed 21st Century Schools. How to pay for that work through this bond sale also will be pitched to the board.

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The district’s capital needs have been largely ignored for years. It will take $288 million over the next decade to eliminate any deferred maintenance, buy land, add on to schools and build others.

That’s on the high end of the 10-year facilities master plan; the low-end of that to-do list comes in at $191.5 million, which is still more than a successful bond referendum and other borrowing plans could allow the district.

What work can or will be done is up to the board. The deadline to place a referendum on the Nov. 6 ballot is Aug. 20. The board is scheduled to vote Aug. 14 on the facilities plan and referendum language — and whether to ask voters to approve it.